A resignation must be clear and unequivocal
In Anderson v Total Instant Lawns Ltd, 2021 ONSC 2933 (Total Instant Lawns), an employee claimed her job was terminated and sought damages for wrongful dismissal. The employer denied the employee was dismissed and argued that she either resigned, repudiated, or abandoned her employment, and counterclaimed for breach of contract. The Ontario Superior Court of Justice sided with the employer, finding that the employee repudiated her employment contract and dismissed her wrongful dismissal claim.
Background
The employee worked for the employer pursuant to a fixed-term contract. Her role was to schedule work crews, record workers’ hours, and prepare the payroll and cheques for the CEO’s signature. The employee’s husband was employed with the same company on a temporary basis, and his last day of work was July 6, 2018.
On July 6, 2018, when in the CEO’s office, the employee noticed that her husband’s last cheque was unsigned. Upon inquiry, she was advised that his hours were overstated; furthermore, there would be a deduction from his pay because he failed to bring his truck back to the office on his last day and another employee had to take time off to retrieve it.
The employee responded via text that she clocked hours as received and threatened to leave and return only when her husband received the pay she claimed was owing to him. When the employee and CEO failed to resolve the matter by phone the employee left the office. The employee stated that she left the office because she had a headache but intended to return. Another employee stated, however, that she told him that she had been fired by the CEO due to a dispute and was no longer working for the employer, and that she returned the office keys by putting them on the CEO’s desk.
That evening, most of the employer’s employees as well as the employee’s husband attended a meeting at the employee’s home. At this meeting, a “Strike Notice” was prepared and signed by several employees including the employee.
It demanded:
- “…those who were wrongfully terminated, namely … [the employee] shall be offered their previous positions back at full pay and to the terms of their contracts should they still wish employment with [the employer]”;
- The employee’s husband be paid his wages in full; and
- The employee be given authority to schedule the workers without alteration by management. (The CEO had previously made scheduling changes on a regular basis.)
On July 7, 2018, another employee advised the CEO that the entire workforce had walked out and was refusing to work unless their demands were met and handed the CEO the Strike Notice. In response, the CEO sent the employee a text message notifying her that as of that moment she was barred from entering the employer’s properties, facilities, or job sites, and from accessing its computers or online accounts. The parties agreed that the employee’s employment ceased that day. While the CEO managed to persuade most of the employees to return to work, profits for the season were negatively impacted.
The employer argued that the employee left her employment with no intention of returning and, accordingly, she either resigned, repudiated, or abandoned her employment. The employee disputed this and argued that the CEO’s text message on July 7, 2018, was a clear and unequivocal termination.
Decision
At the outset of its decision, the court provided the following outline of the tests for the four legal concepts “at the heart of the analysis.” It stated:
- A resignation must be clear and unequivocal. Whether words or action equate to resignation must be determined contextually. The surrounding circumstances are relevant to determine whether a reasonable person, viewing the matter objectively, would have understood an employee to have unequivocally resigned.
- Upon considering whether an employee has abandoned their employment, factors that will be considered are a failure to report to work, a failure to follow policies and procedures, relocation and a lack of intention to return.
- Whether an employer is justified in terminating an employment relationship based on repudiation requires an assessment of the context of the employee’s refusal to determine whether the employee refused to perform an essential condition of the employment contract, or whether the employee’s refusal to perform job responsibilities was directly incompatible with their obligations to the employer.
- In a wrongful dismissal action, the onus is on the employee to demonstrate that a reasonable person would consider the employer’s statement or actions to be a termination.
The court declined to find that the employee resigned because she did not unequivocally indicate to the CEO that she was not returning to work. The court concluded that the employee repudiated her employment contract because the evidence indicated that as of July 6, 2018, she had no intention of returning to work unless certain conditions were met and, furthermore, she refused to perform her job responsibilities. In support of this conclusion, the court noted:
- The employee actively participated in the organization of the work stoppage: she was specifically mentioned in the Strike Notice, signed it, and the meeting where it was prepared was held in her home;
- In the Strike Notice, the employee sought to force a change in the terms of her employment and stated she would not return to work unless the changes were instituted. Specifically, the employee demanded to be in full control of scheduling and that the CEO would no longer be able to make changes.
- In failing to keep her husband’s hours and refusing to provide the CEO with any record of them, the employee was refusing to perform her duties, which included keeping track of all employees’ hours and preparing payroll based on those hours.
After concluding that the employee repudiated her employment contract, the court dismissed her wrongful dismissal action.
The court denied the employer’s claim for damages for wrongful resignation, stating that an employer could successfully make such a claim only if it could demonstrate that it suffered losses or costs in excess of what it saved by not paying the employee’s salary during the notice period.
The court noted that the CEO replaced the employee almost immediately by hiring a friend. Furthermore, as there was insufficient evidence to conclude that the employee organized the work stoppage, the court could not conclude that any losses suffered as a result of it were a direct result of the employee’s departure.
Bottom Line for Employers
Total Instant Lawns is a useful decision for employers that encounter an employee who refuses to: (i) work unless new employment conditions are met, or (ii) perform their job responsibilities.
It indicates that employers facing these circumstances may terminate their employment relationship with the employee on the ground that the employee has repudiated the employment contract, provided the employer can demonstrate that that the employee’s refusal is directly incompatible with their employment obligations.
The ability to terminate an employment relationship on the ground of repudiation can be a helpful tool for employers that discover they have a challenging employee in their employ. Employers are encouraged to document the behavior of such employees to build a strong case for repudiation and to protect themselves should the employee make a claim for wrongful dismissal.
By Rhonda B. Levy, Knowledge Management Counsel at Littler, responsible for satisfying the firm's Canadian knowledge management needs, for monitoring legislative, regulatory and caselaw developments, and for drafting and editing publications.
By Barry Kuretzky, Partner at Littler counsels clients in the labour relations area, which includes collective bargaining, union organizing drives, certification and decertification of unions, grievances and arbitrations.